SUSTAINABLE COMMODITIES

MARKETPLACE SERIES 2019

Global Market Report: Coffee

Vivek Voora, Steffany Bermúdez, Cristina Larrea

Demand for coffee is expected to grow, but low
farm profitability may hurt supply.
Coffee is one of the most traded agricultural commodities
in the world: in 2017 alone, 70 per cent of total coffee
production was exported, worth USD 19 billion.1,2 That
same year, the sector had a retail market value of USD 83
billion, providing jobs for 125 million people.1,3 Coffee is
grown on 12.5 million farms worldwide, of which 67–80 per
cent are smallholder farms primarily located in developing
countries, including 22 Low Human Development
Countries (LHDCs).4,5 The largest producing and exporting
countries in 2017, irrespective of human development
level, were Brazil (USD 4.6 billion), Vietnam (USD 3.5
billion) and Colombia (USD 2.58 billion), while the largest
importing countries in 2017 were the United States (USD
6.3 billion), Germany (USD 3.5 billion) and France (USD
2.8 billion).6 Overall, coffee supply growth outpaced demand
growth from 2016 to 2017, at rates of 5 per cent versus 2
per cent respectively, resulting in a global coffee surplus of
around 250,000 metric tonnes. The global supply–demand
balance of coffee varies from year to year: 2016 closed with
a supply deficit, while a surplus is estimated for 2018.2 The
sector is projected to grow, fuelled by increasing demand
from producing countries and emerging economies that have
not traditionally been among the major coffee importers,
such as Brazil, Indonesia and China, as well as the expansion
of retail options and coffee-based products such as ready-
to-drink products.7,8 Another notable development is the
increased adoption of voluntary sustainability standards
(VSSs) by coffee producers: in 2016, 34.5 per cent of the
market was made up of VSS-compliant coffee, while coffee
that was potentially VSS-compliant represented 21.4 per
cent, and conventional coffee production accounted for 44
per cent of the market.

VSS-Compliant Coffee Accounted for at Least 34 Per Cent of Total Coffee Production in 2016
Figure 1. Global coffee production trend 2008–20169

10,000,000

8,000,000
34.5%
Metric Tonnes

6,000,000
21.4%

4,000,000

VSS Compliant

2,000,000 44%
Potentially
VSS Compliant
Conventional
0
2008 2009 2010 2011 2012 2013 2014 2015 2016

Note: Conventional production volumes do not comply with a VSS, while VSS-compliant production volumes refer to coffee produced in compliance with one or more VSSs.
Production volumes that are defined as potentially VSS-compliant cannot be definitively identified as conventional or VSS-compliant with the data currently available.
The market advisory firm Mordor Intelligence predicts
that the global market (retail) value of the coffee sector
will experience a 5.5 per cent compound annual growth
rate (CAGR) from 2018 to 2023, yet this positive outlook
must be viewed against the coffee sector’s history of price
volatility across multiple decades and long-term price
decline.7 Traditionally, farm gate prices have struggled
to keep pace with production costs, which hurts farm
profitability and makes it difficult for coffee farmers to make
long-term decisions on investments and planting, ultimately
disincentivizing many of them from staying in the sector.4,7
Increasing the volume of coffee production, regardless of
whether this coffee is VSS-compliant, to meet the projected
growth in demand from non-traditional coffee importers is
further challenged by the effects of a changing climate, as
land suitable for coffee cultivation will be subject to more
unpredictable weather patterns, with negative implications
for coffee yields. These climate change risks are not limited
just to extreme weather events: there are already cases where
coffee-producing countries have faced severe pest and
disease outbreaks, such as coffee rust, that have decimated
their crops and further exacerbated the volatility of the
global coffee market.4

How Much Coffee is Certified by Each Consumption of more sustainable coffee

Standard? supports the growth of VSS-compliant
production, which can help address
Figure 2. Standard-compliant coffee production
volumes in 20169
environmental and social development
challenges.
VSSs emerged in the coffee sector over 30 years ago, with
non-governmental organizations, private sector actors and
other industry stakeholders looking to provide roasters,
4C retailers and consumers with the ability to distinguish between
2,764,002 MT conventionally produced coffee and its more sustainable
coffee equivalent. The latter options would be produced in a
way that was conscious of emissions, biodiversity conservation,
and worker health and safety considerations throughout the
value chain, while also aiming to provide larger economic
gains for producers. Being able to associate a particular coffee
UTZ Certified brand with a socially and environmentally sound reputation
through certification was meant to stimulate demand from
870,102 MT coffee sourcing companies and end consumers for this type
of product. This would in turn drive greater investment into
more sustainable production practices, and the corresponding
Fairtrade International training and support that farmers would need to change their
production techniques and approaches, thus boosting the
560,902 MT supply of VSS-compliant coffee.

To date, there are some promising signs of VSSs’ success on

the supply side, particularly in recent years: VSS-compliant
Rainforest Alliance
coffee experienced a CAGR of about 24 per cent from
508,632 MT 2008 to 2016, accounting for at least 34 per cent of coffee
production overall. 4C, UTZ Certified, Rainforest Alliance,
Fairtrade and Organic are the main VSSs in the coffee sector,
Organic when ranked by production size. In 2016, at least 3 million
metric tonnes were VSS-compliant, with coffee valued at USD
431,912 MT
7.2 billion. This value is derived from the average producer
prices per country, as reported by the Food and Agriculture
Organization of the United Nations (FAO), which is then
applied to the volume of VSS-compliant coffee produced per
LIVELIHOODS country.9,10 The majority of VSS-compliant production, at
Over 125 million jobs in the coffee sector approximately 70 per cent, comes from Latin America (Brazil,
12.5 million growing farms Colombia and Peru) with some important volumes coming
from Asia (Vietnam and Indonesia) and Africa (Ethiopia,
67%-80% smallholder farms
Tanzania and Uganda).9,11
On the demand side, the results have been mixed. The 10
largest coffee roasting companies purchased 3.31 million
metric tonnes of coffee in 2016, accounting for 35 per cent
of total global coffee sourcing. From this total, 1.14 million
metric tonnes were VSS- and corporate-initiative-compliant
coffee, which refers to sustainable coffee production programs
established by private companies rather than by independent
third parties.4 Examples of corporate sustainability initiatives
in the coffee sector include Starbucks’ CAFÉ Practices and
Nestle’s Nespresso AAA programs.
Based on the sourcing commitments of the 10 largest coffee
roasting companies, and assessing these against current coffee
sourcing information, an additional 0.3 million metric tonnes
of sustainable coffee could be sourced by 2025. The leading
buyers’ sourcing commitments are driven mainly by final end
consumer preferences to purchase more sustainable and healthy
products.12 Even though demand for VSS-compliant coffee
continues to grow, because this demand is concentrated mainly
in traditional markets such as Europe and the United States, it
remains lower than supply.13 This supply–demand imbalance
can limit VSS-compliant coffee’s market growth potential and
needs to be addressed by value chain actors to benefit from the
opportunities that stem from growing coffee demand from non-
traditional coffee importers. This includes higher demand from
producing countries and emerging economies, especially those
in Asia and Oceania.2,7,8
Expanding production of sustainable coffee
may require moving into less-developed
growing regions.
VSS-compliant coffee and sustainable corporate initiatives
are propelling the sector toward potentially becoming one of
the first commodities to reach significantly high compliance
with a sustainability initiative. This potential, however,
must be assessed against the above-mentioned risks, such
as price volatility and price decline, oversupply of VSS-
compliant coffee and the effects of climate change on coffee

Good Progress Toward Sourcing More Sustainable Coffee

Figure 3. Major coffee roasting companies and their sustainable sourcing commitments4,14–18

70% sustainable sourcing by 2020

Nestlé 870,000

In 2016, Nestle's total coffee consumption

was 870,000 metric tonnes, of which 55%
* Jacobs Douwe Egberts 710,000 was sustainably sourced. They are close to
reaching their goal of 70% by 2020.
10% sustainable sourcing by 2018
Commitment to 70%
Smuckers 350,000 sustainable sourcing by 2020

100% sustainable sourcing by 2020

55% Sustainable 45% Conventional
Starbucks 290,000 Consumption in 2016 Consumption in 2016

870,000 MT

* Strauss 285,000

* Lavazza 200,000
Sustainable Consumption
(MT, 2016)

Conventional Consumption
* Ueshima Coffee Co. 190,000
(MT, 2016)

100% sustainable sourcing by 2025 Sustainable Sourcing

Commitment (% and year)
Tchibo 180,000

* Massimo Zanetti 145,000

100% sustainable sourcing by 2020

Keurig Green Mountain 90,000 * data not found for sustainable
sourcing commitments
0

200,000

400,000

600,000

800,000

1,000,000

Metric Tonnes
yields. Although the production of sustainable coffee is
experiencing a greater growth trend than the overall sector,
its continued expansion may now require moving into
new markets and working with farmers that have fewer
resources and less capacity than those that are already VSS-
compliant. This strategy will require greater investments
and innovative approaches to support farmers as they
transition toward more sustainable production practices.11
Another core consideration in assessing opportunities for
expanding VSS compliance in the sector is the human
development level of coffee-producing countries, as
assessed by the Human Development Index (HDI).
Out of 82 coffee-growing countries in 2016, 22 were
ranked as LHDCs under the HDI, and 11 of these
LHDCs produced VSS-compliant coffee. These LHDCs
accounted for 12 per cent of the total coffee grown in
2016 and were responsible for 8–9 per cent of the total
VSS-compliant coffee produced worldwide that same year.
According to our analysis, there have been promising
signs of growth in VSS-compliant production among
these LHDCs: looking at the 2008–2016 time period,
VSS-compliant coffee production in LHDCs increased
at a CAGR of approximately 19 per cent with Organic
as the VSS with the largest volume of coffee production
coming from LHDCs followed by 4C and Rainforest
Alliance in 2016.9 The expansion of VSS-compliant coffee
production in LHDCs could result in important environmental
and societal development benefits via the adoption of more
sustainable agricultural practices, such as lower emissions from
production and the improvement of working conditions.
Going forward, there are promising signs of VSS expansion
potential among countries that are already producing
significant shares of the world’s coffee and have begun to
adopt VSSs, including some countries that are LHDCs.
MARKET VALUE
Over 7.12 Billion USD VSS-compliant coffee
based on 2016 coffee producer prices
CAGR 2008-2016
Conventional production is down by 8%
while VSS production is up by 24%
VSS production in LHDCs is up by 19%
COFFEE PRODUCTION IN LHDCs
12% of total coffee produced
8-9% of VSS compliant coffee produced
based on 2016 data
Of the top coffee-growing countries, Brazil, Vietnam,
Indonesia, Ethiopia and Colombia offer good prospects for
increased sustainable coffee production, considering their
total coffee output and existing presence of VSSs. Notably,
only one of those five top coffee-growing countries,
specifically Ethiopia, is an LHDC: the overall contribution
of LHDCs to global coffee production is still relatively
small compared to the largest coffee producers. In terms
of the opportunities for expanding VSS-compliant coffee
production in LHDCs and the potential for maximizing
sustainable development outcomes, the countries that
show the most potential for growth in light of their share
of total coffee production, the presence of VSSs and their
HDI value are Ethiopia and Uganda, followed by Côte
d’Ivoire, Madagascar and Papua New Guinea, according to
our analysis based on 2016 figures.9 Positive development

The Sustainable Commodities Marketplace Series provides a market performance overview and outlook for key
agricultural commodities that comply with voluntary sustainability standards (VSSs), focusing on global sustainable
consumption and production. Each year, the series focuses on a different overarching theme, with individual reports for
that year devoted to providing a market update for a chosen commodity. These reports are designed to be accessible
and relevant for a range of audiences, including supply chain decision makers, procurement officers, policy-makers
and producers. The series builds on The State of Sustainable Markets: 2018: Statistics and Emerging Trends, a joint
publication from IISD, the International Trade Center (ITC), and the Research Institute of Organic Agriculture (FiBL),
which examines over a dozen sustainability standards for various different commodities.

This Global Market Report analyzes recent trends in coffee production, consumption, trade flows and other relevant areas.
The report also emphasizes the potential for expanding VSS-compliant production in Low Human Development Countries
(LHDC), given factors such as share of global coffee production, VSS presence and Human Development Index (HDI) value.
It uses 2016 data across all three factors, given that this is the latest year with data available for VSS-compliant coffee.
By comparing the growth rates and patterns of standard-compliant versus conventional consumption and production of
coffee, this report provides insights on how sustainable and conventional markets are performing at a global level, and
highlights which countries have the potential to produce more VSS-compliant coffee.

The State of Sustainability Initiatives (SSI) is an international transparency and capacity-building project that aims to
improve strategic planning and sustainable development outcomes related to VSSs. It does so by providing in-depth,
credible and needs-based information on VSS characteristics, market performance and potential contributions to
addressing development challenges.
Coffee-Growing Regions of the World
Figure 4. Distribution of coffee production in the top fifteen producing countries in 2016

China
Mexico

Vietnam
Colombia

India
Côte d’Ivoire
Guatemala

Uganda Ethiopia

Laos
Honduras

Brazil
Nicaragua

Indonesia
Peru

Significant Producer HDI Conventional Production

1,000,000

tonnes
Low High Harvest Area Potentially VSS Compliant 500,000
Medium Very High Prevalent VSS-Compliant Area VSS Compliant 0

Sources: see endnotes 9, 25, 26

Download high resolution version of map at bit.ly/ssi-coffee

outcomes through the expansion of VSSs can also take Of the leading producer countries, Brazil and
place in the largest coffee-producing countries, such as Vietnam dominated coffee exports in 2016. Top
Brazil, Vietnam and Colombia. While these are not LHDCs, importers were primarily European countries,
their smallholder coffee farmers continue to experience followed by North American countries.
poverty, and pursuing greater VSS compliance might
contribute to improving their livelihoods.19–21 Figure 5. Trade flows of the largest producer
countries in 2016, in metric tonnes. Coffee not
Moving the coffee sector toward more sustainable forms roasted, not decaffeinated.
of consumption and production will require additional
Africa &
resources and investments, given that the least demanding Middle east
opportunities to do so have, for the most part, already 254,202 [5.39%]
Asia
been pursued. In addition, there is also a clear need 667,610
[14.17%]
for coordination among value chain actors, including Brazil
1,873,894
buyers, standards bodies and roasters, to address [39.15%]

persistent challenges in moving the coffee sector toward

more sustainable production methods and consumption,
including by capitalizing on the opportunities provided
by VSSs. For example, these value chain actors can work Europe
Colombia 2,305,710
together to stimulate greater demand for VSS-compliant 715,403 [48.93%]
[14.95%]
coffee in importing and producing countries, improve
Ethiopia
farm profitability and strengthen the resilience of coffee 165,334
[3.45%]
production practices to climate change. Indonesia
394,152
[8.23%]
This coordination among value chain actors is even more
important given some of the risks that the sector faces
in terms of price volatility and the negative impacts of North America
Vietnam 1,154,302
climate change, which lie largely outside their control. 1,637,781 [24.50%]
[34.22%]
The emergence of several important initiatives such as
South America
the Sustainable Coffee Challenge, Sustainable Food 78,765 [1.67%]
South Asia
Agriculture Environment Platform and the Global 251,563 [5.34%]
Coffee Platform, born out of the 4C standard, suggests
that coffee sector stakeholders are already moving in a Note: These five countries represent the 68% of total coffee production in
2016. The % in brackets for each country represents the proportion of the total
coordinated fashion toward a more sustainable future for volume of coffee exported in 2016 by the five countries. The % in brackets for
coffee producers and consumers.22–24 each region represents the proportion of the total volume of coffee imported in
2016 from the five countries.
Sources: see endnotes 27, 28
1.
Salado, A. (2018). Five most promising markets in coffee. Presented at DNA Café
– Seminário Internacional 2018. Retrieved from http://go.euromonitor.com/
rs/805-KOK-719/images/Five_Most_Promising_Markets_in_Coffee.pdf?mkt_
tok=eyJpIjoiT1RrME56TTFNalUxWmpoaSIsIn
QiOiJQUHBmbGFmSVduSG9rSGFUcHE5d0tNSEVpRjN6
TDhlenBZYkI1ejVQdUExTTVzZkR6TlwvUEc5VXRRT0ZyaGtaa
W5JcHkxY2lTZlIzXC90VzdCMUYwT01nbDVLaUdWZHZOcm8z
VnJWaFZGNXErYk83UzBcL1Q5R0JWaDROcmpqQnphMSJ9
2.
International Coffee Organization. (2019, March). Coffee market report.
Retrieved from http://www.ico.org/documents/cy2018-19/cmr-0319-e.pdf
3.
Fairtrade Foundation. (n.d.). Coffee farmers. Retrieved from https://www.
fairtrade.org.uk/Farmers-and-Workers/Coffee
4.
Panhuysen, S., & Joost, P. (2018). Coffee Barometer 2018 (p. 36). Retrieved from
https://www.hivos.org/assets/2018/06/Coffee-Barometer-2018.pdf
5.
International Coffee Organization. (2019, April 12). Report of the 16th meeting
of the Statistics Committee held on 27 March 2019 (SC 93/19). (p. 4). Retrieved
from: http://www.ico.org/documents/cy2018-19/sc-93e-report.pdf
6.
Workman D. (2019). Coffee exports by country. Retrieved from: http://www.
worldstopexports.com/coffee-exports-country/
7.
Mordor Intelligence. (2018). Coffee market - Growth, trends and forecasts
(2018-2023). Retrieved from https://www.mordorintelligence.com/industry-
reports/coffee-market
8.
Sänger, C. (2018, April 25). State of the global coffee market. Presented at the
10th Multi-Year Expert Meeting on Commodities and Development, Geneva,
Switzerland. Retrieved from: https://unctad.org/meetings/en/Presentation/
MYEM2018_Christoph%20Saenger_25042018.pdf
9.
Lernoud, J., Potts, J., Sampson, G., Schlatter, B., Huppe, G., … Dang, D.
(2018). The state of sustainable markets 2018: Statistics and emerging trends.
Geneva, Switzerland: International Trade Centre. Retrieved from http://www.
intracen.org/uploadedFiles/intracenorg/Content/Publications/Sustainibility%20
2018%20layout-FIN-web2.pdf
10.
Food and Agriculture Organization. (2017). Producer prices - Annual.
Retrieved from http://www.fao.org/faostat/en/#data/PP
11.
Potts, J., Lynch, M., Wilking, A., Huppe, G., Cunningham, M., & Voora, V.
(2014). State of sustainability initiatives review 2014: Standards and the green
economy. Winnipeg, Canada: International Institute for Sustainable Develoment,
International Institute for Environment and Development.
12.
Nielsen. (2018). Sustainable shoppers buy the change they wish to see in the
world. The Evolution of the Sustainability Mindset. Retrieved from https://
www.nielsen.com/us/en/insights/reports/2018/the-education-of-the-sustainable-
mindset.html
13.
Elliott, K.A. (2018). What are we getting from voluntary sustainability standards
for coffee? Retrieved from https://www.cgdev.org/sites/default/files/what-are-we-
getting-voluntary-sustainability-standards-coffee.pdf
©2019 The International Institute for Sustainable Development
Published by the International Institute for Sustainable Development.
Head Office
111 Lombard Avenue, Suite 325 Tel: +1 (204) 958-7700
Winnipeg, Manitoba Website: www.iisd.org
Canada R3B 0T4 Twitter: @IISD_news
iisd.org
14.
Nestlé. (2017). Nestlé in society: Creating shared value and meeting our commitments
2017. Retrieved from https://www.nestle.com/asset-library/documents/library/
documents/corporate_social_responsibility/nestle-csv-full-report-2017-en.
pdf#page=56
15.
Keurig Green Mountain. (2017). Keurig Green Mountain 2017 sustainability
report. (p. 30). Retrieved from http://www.keuriggreenmountain.com/~/media/
Sustainability/PDF/ReportsDisclosures/KeurigSustainabilityReport_2017.ash
16.
Tchibo. (2018). Sustainability. Retrieved from https://www.tchibo-coffee.co.uk/
sustainability/
17.
Starbucks. (2017). Global social impact: 2017 performance report (p. 24). Retrieved
from https://stories.starbucks.com/wp-content/uploads/2019/01/Starbucks_
Social_Impact_Report_2017.pdf
18.
Smucker’s. (2018). Green coffee: Responsible sourcing. Retrieved from http://
corporateresponsibility.jmsmucker.com/sourcing/coffee.php
19.
Summers, C. (2014). How Vietnam became a coffee giant. BBC News.
Retrieved from https://www.bbc.com/news/magazine-25811724
20.
Lamm, S. (2013). Poverty and the coffee industry. The Borgen Project.
Retrieved from https://borgenproject.org/poverty-coffee-industry/
21.
Degn, E. (2018). How fair trade coffee in Colombia could solve the poverty
struggle. The Borgen Project. Retrieved from https://borgenproject.org/how-fair-
trade-coffee-in-colombia/
22.
Global Coffee Platform. (n.d.). Accelerate your coffee sustainability. Retrieved
from https://www.globalcoffeeplatform.org/accelerate-your-coffee-sustainability
23.
Conservation International. (n.d.). Sustainable Coffee Challenge. Retrieved
from https://www.sustaincoffee.org/about
24.
Inter-American Development Bank.(n.d.). SAFE Sustainable Agriculture Food
Environment. Retrieved from http://www.safeplatform.org/
25.
Monfreda, C., Ramankutty, N., & Foley, J. A. (2008, March). Farming the
planet: 2. Geographic distribution of crop areas, yields, physiological types,
and net primary production in the year 2000. Global Biogeochemical Cycles,
22, 1. doi: 10.1029/2007GB002947. Retrieved from http://www.earthstat.org/
harvested-area-yield-175-crops
26.
Tayleur, C.,Vickery, J., Butchart, S., Corlet W. C., Buchanan, G… Ducharme,
H. (2017). GIS data for: Where are commodity crops certified, and what does
it mean for conservation and poverty alleviation?, Mendeley Data, v2. Retrieved
from https://data.mendeley.com/datasets/mpdf6ytswm/2
27.
Chatham House. (2017). Resource Trade. Earth. Retrieved from https://
resourcetrade.earth/
28.
Food and Agriculture Organization. (2017). Production Quantity. Retrieved
from http://www.fao.org/faostat/en/#data/QC
In collaboration with ITC and Fibl
With the support of the Swedish government